Capital growth player Attacq plans to become a real estate investment trust (Reit), says the company that owns the Mall Africa near Midrand.
The move to the Reit structure means it will start paying dividends to shareholders, which is likely to put the counter on the radar of a wider investor audience. Many South African property fund managers are mandated to invest in income-producing companies only.
Attacq listed on the JSE in October 2013. It has since completed 32 developments, including the Mall of Africa and 25 other developments in Waterfall, adding 434,154m² of lettable area to its portfolio.
CEO Morné Wilken said on Tuesday that the group would pay its first dividend at the end of its June 2018 financial year before obtaining full Reit status in its 2019 financial year.
"It is now appropriate for Attacq to reposition itself and adopt a strategy which includes income distribution … subject to the approval of the JSE for Reit status for the financial year commencing July 1 2018," said Wilken. "We always intended to become a Reit, eventually.
"We sit with some income-producing properties, such as Mall of Africa, but also a very healthy pipeline, which will grow tremendously from a capital point of view. I believe Waterfall City will pipeline for 10 to more than 15 years."
Dividends were expected to grow 20% per year over the 2019, 2020 and 2021 financial years, said Stanlib head of listed property funds Keillen Ndlovu. He welcomed Attacq’s shift in strategy.
"It’s a good move. It aligns Attacq with the rest of SA’s listed property sector. South African investors love income or distributions and Reit-like structures. The conversion to a Reit will make it easier to value the stock. Management has been working on simplifying the business too. This is all positive," he said.
A repositioning to achieve Reit status was under way. "This process includes the reduction of existing debt facilities with the proceeds from the disposal of Attacq’s central and eastern European investments, the continued optimisation of its balance sheet and the sale of certain noncore assets, where the deployment of the proceeds will serve to enhance sustainable and growing distributable earnings," Attacq chief financial officer Melt Hamman said.
At December 31 2016, Attacq’s operational domestic portfolio had a gross value of R18.6bn.